A.M. Best Downgrades Rating of Standard Life Insurance Company of Indiana; Revises Outlook to Stable.OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B+ (Very Good) of Standard Life Insurance Company of Indiana (Standard Life), the principal life insurance subsidiary of Standard Management Corporation (SMAN SMAN Standard Medium Accuracy Navigator SMAN Server Manager ) (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : SMAN) (both of Indianapolis, IN). The rating outlook is revised from negative to stable. Additionally, A. M. Best has affirmed the financial strength rating of B (Fair) of Dixie National Life Insurance Company (Ridgeland, MS), a wholly-owned subsidiary of Standard Life. Its rating outlook remains stable. These rating actions reflect the weakened financial position of the parent holding company, SMAN and its impact on Standard Life. The weakened financial position is attributed to continuing losses from the organization's new and growing health services health services Managed care The benefits covered under a health contract business, increased financial leverage, an increased level of intangible assets and the modest financial flexibility at SMAN. These financial challenges have resulted in SMAN relying on Standard Life to support its financial and operational obligations. In addition, A.M. Best notes that Standard Life's risk-adjusted capitalization continues to remain low when measured by Best's Capital Adequacy Ratio Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[], is a ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss. , due to a significant growth in the company's asset accumulation business over the past five years despite surplus contributions. While Standard Life's statutory operating results have been consistently positive over the past five years, A.M. Best believes that its operating results may be vulnerable to spread compression and reinvestment risks as a result of rising interest rates. On a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis, Standard Life's operating results have been negatively impacted by large DAC See D/A converter and discretionary access control. DAC - Digital to Analog Converter write-offs over the past two years. Standard Life has implemented strategies to adjust its sales of new annuity business to improve its risk-adjusted capital position. A.M. Best also notes that the majority of Standard Life's annuity reserves are well protected from disintermediation The elimination of the distributor and/or retailer (the middleman) when making a purchase. The term is used to refer to purchasing directly from a manufacturer's Web site, the benefits of which are convenience, fast turnaround time and sometimes lower prices. risk and remain adequately supported by its investment grade bond portfolio. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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